>> thanks for your guidance. we will take you back for the tail end of the hearing. >> fall below on the smaller institutions. i think it was good in theory. the challenge has been as best practices to kind of built into the regulator's mindset even though there may not be a legal requirement for these additional regulatory obligations. for these smaller institutions p. i know earlier on when he was head of the fdic there were, in fact, job owning efforts and others. i would encourage you and your colleagues and fdic, when kol plins is the fastest growing area in the finance industry that should be of some concern. and in some institutions it needs to be but in some of our smaller institutions, we are, i think, affecting the market in a way at least from this

standpoint is not what we hoped to do in putting our smaller banks at such a disadvantage. there may be ways to guidance or other things that you can nudge our regulators. part of this i think is a mindset that you could come back to. my time is going quickly. let me just ask two questions totally unrelated so i can get them out before the chairman gavels me out. >> continuing to monitor the testimony by janet yellen taking questions by senators on the banking committee. senator joe manchin, democrat from west virginia asking the fed chairman about bitcoin. >> the federal reserve simply does not have authority to supervise or regulate bitcoin in any way. >> and that's pretty much puts a period on it, all that. obviously getting attention as sarah said. again, the rest of the hearing. >> and we've kind of made this

addiction to debt amongst we're studen our students. i'd like a comment on that and also i'd like a comment on an issue that i've raised before and i know you've not -- you felt i perhaps over stated it but with our financial institutions now having $2.4 trillion in excess reserve deposited at the fed and i know that 25 basis point interest rate you pay, you feel isn't that much. i would simply say that, you know, when you've got other central banks like the bank of denmark which has made a negative, that has pushed their institutions to get more of that money lent out, which actually then might assuage senator shelby because you might not have to do as many asset purchases if some of these banks were doing more to sim stimulate and get that capital back out to the marketplace. i do believe the excess reserves, i hope you will comment on that as well. thank you, mr. chairman.

i got that all done with 12 seconds left. >> so with respect to student debt, i mean, clearly the outstanding volume of governments supplied student debt has escalated. i mean, on the one hand i think it's a good thing because there are these huge differentials between what more and less educated people earn and we want people to have access to education to improve their skills. but on the other hand, it may be that sometimes they don't quite know what they're buying and what the education that they may be acquiring, you know, it's important for them to understand whether the placement rates and job experiences of the schools that they are paying to go to, it's not obvious that that's always readily available. and then again, because student debt is something that you can't get rid of in bankruptcy,

individuals who take it on can really be faced with very substantial burdens if they encounter financial difficulties and that's really of some concern. on the interest on reserves, i recognize the argument that you're making. i think that lowering that right would have very limited. it goes in the right direction. but would have a very limited affect on bank lending. we have worried about what impact it would have on money markets that we operate in and not wanting to disrupt completely disrupt money market activities. it's something we have considered and could consider going forward. but there are conflicting things that are going on there. >> senator? >> thank you very much, mr. chairman.

thank you for your testimony before our committee. i want to focus on a report that was released yesterday by senators carl levin and john mccain. a bipartisan report that chronicled how credit suisse helped thousands of u.s. americans e vad u.s. taxes by stashing their money in swiss banks. it highlighted abuse where's employees came to the bank to get recruits at golf tournaments and bank sponsored events by telling u.s. officials they were here for tourism. they set up special meeting rooms in airports. billions of dollars of u.s. taxes were dodged in the course of this with the help of the bank. it is doing business in the u.s. under the supervision of the federal reserve board. now, this report very thoroughfathoresearched for failing to prosecute or huge the lever at its disposal of a

bank operating out of the u.s. senator levin rightly pointed out if the swiss bank doesn't want toer can't comply with u.s. law, maybe it shouldn't do business in the u.s. this case has reminders or echos of the hsbc case we saw just a year ago, flagrant vial lagszs through transactions carefully structured to keep u.s. officials out of the loop and once discovered unwillingness by the bank regulators to use their authorities to hold anyone accountable. as senators levin and mccain asked the ceo to admit yesterday and he did admit to not one person was fired for flagrant willful violations of u.s. law from the ceo on down. it's the same story for hsbc and for any number of other banks involved in predatory transactions that hurt american citizens. so i guess my question is this.

we have a situation where the government refused -- and this is the government of switzerland -- refused and blocked the identification of the folks who were stashing their money in switzerland. we're talking about 22,000 u.s. customers with swiss accounts of which less or about 1% the names were shared with the u.s. if they're not going to share the names for these illegal activities, shoupd should the federal reserve board be using its regulatory power to basically say if you can't play by the rules you can't bank in the united states? >> well, certainly in your work with enconstitutions it's incumbent upon us to make sure they comply with the law. when there are violations with the law we will refer it, have referred it, and will refer it

to the department of justice if there is criminal behavior that's involved. the department of justice should be pursuing that. and i think the behavior that senator levin uncovered with respect to this institution is both illegal and highly unacceptable and it should be pursued. >> so certainly criminal action being referred to the department of justice is appropriate, but you also have powers. you have powers for how banks operate in the u.s. that are separate and independent of the department of justice. should you -- should the federal reserve be using these powers in reaction to this type of criminal behavior? >> well, so our obligation has to do with safety and soundness. and to the extent that these practices are illegal and we have an institution that is discovered not to be complying with the law, we have an

obligation to act to make sure that it comes into compliance and if we detect behavior that's criminal, we -- it's our obligation to refer that to the justice department for prosecution. >> so one of the powers you have directly is to remove executives of banks when they misbehave. is it your intention to pursue this issue in any way to explore whether that type of action is appropriate in this situation? >> i -- i will discuss, you know, with my colleagues what's appropriate. i don't have a definitive answer for you. >> thank you very much for pursuing that. i'll certainly want to follow up with you because when we're talking over a billion dollars of tax evasion and of 22,000 americans engaged, we can't even get more than 1% of the names of folks and yet it is up to our

regulatory agencies to decide whether and how a bank participates in the u.s. economy. and if we're holding u.s. banks to one standard and letting foreign banks operate by a completely different standard, that's a fundamental unfairness and it's also an unfairness to ordinary americans. if ordinary americans are engaged in tax evasion, they can serve a lot of years in jail. in this case we're talking massive facilitation of tax evasion by a bank. now, well documented by mccain and levin, and it seems like there should be some accountability. and i know folks in my town halls ask this all the time, why does this seem to be a different standard, with hsbc, money laundering documented over a ten-year period, facilitated terrorist networks, fa sill at this timed drug networks, they facilitated the evasion of u.s. sanctions very important to us, for example, the sanctions to try to prevent iran from obtaining a nuclear weapon and yet not one bank official was

held accountable. and so this is another chapter and a new opportunity to change this story of fundamental justice and fairness. and i would just ask that you take a very serious look at it. >> i will. thank you. >> senator shelby has a brief point to make. >> madam chair, thank you very much for sticking around with us. i pose this, is the fed inconsistent? let me explain. on one hand the federal reserve holds a gse securities on its balance sheet at face value and on the other hand it's asking under gse -- i mean, under basel regulation it's asking financial institutions, that our banks, that hold the same g zerks back securities that the fed has basically to take a 15% haircut

when risk weighting such assets for the purpose of basel iii calculations. that's my understanding of what's going on. how is the market to interpret this discrepancy in the approach by the fed to its own portfolio as opposed to the portfolio of the banks that it regulates? it looks like on monetary policy you got one thing, your own stuff, and then the banks who hold about 40% of gses regulations looking at it a different way. >> senator, they have capital requirements. >> that's right. that's exactly right. liquidity. whether they call it new liquidity coverage ratio under the basel iii deal. >> why would the fed have a liquidity -- have a -- we -- you mentioned that we carry these on

our balance sheet at face value. that's an accounting convention that we use in fed accounting. we also report when there are price fluctuations for these securities. we report that in our -- in our financial accounts so the market value of these securities is -- >> i understand that. but at the same time, aren't you on one hand treating as regulator, your banks, say they have to take a 15% haircut on gse holdings and the fed is different. i know you do different things. >> i mean, we want -- >> approaches should be consistent, or should it not? >> i mean, we want to make sure in the liquidity coverage ratio that things have adequately quid assets to be able to meet potential withdrawals, that they can face over a period of about

a month. and while mortgage backed securities are assets that can be sold, they're somewhat less liquid than treasuries and the most liquid and cash. and so in commuting this, we put on place a 15% haircut. but to say that the same requirement should apply to the fed, i'm confused about that because we don't have the possibility of having runs on the federal reserve -- >> ma'am, i was raising the inconsistency in the approach. is there an inskoiconsistent approach or do you say one is good for the banks and the fed doesn't need that? >> i believe that the fed doesn't need that. and we're not in this area of liquidity and the need to maintain liquidity that the federal reserve is really quite different than an ordinary

commercial bank. we're not subject to liquidity runs. and to me, it's different. >> but the saying you treating securities differently. i mean, you're treating the gses-backed securities in a different way. you're basically waiting -- weighing or waiting the haircut of 15% discount, in a way, of the value of those securities. is that right? >> well, because -- >> under basel iii. >> we think they're somewhat less liquid than, say, treasuries and because they -- because they are somewhat less liquid the markets in which they trade, there needs to be some haircut that they're not -- that they don't quite as good as cash or treasuries in terms of meeting potential runs on a bank or a liquidity drains.

to me, that's -- to me, that's an appropriate recognition of the difference in liquidity between mortgage-backed securities and treasuries or cash. >> 15% is a pretty good number though, isn't it? >> it's -- it's something. >> is that a high number? is that an arbitrary number that's been brought forth to risk weight something at a discount of 15%? >> there are judgments that have been made throughout about what the appropriate rates of discount -- >> a lot of the smaller banks are concerned about this because they have bought a lot of gse securities and if they're going to be risk weighted adversely in their portfolio, it could cause them a problem, as you well know. >> so we put this proposal out for comment, and you know, we will certainly look at all the comments. >> look at it closely. >> we will look at all the

comments that come in and try to take that account as we craft a final proposal. >> thank you. >> chair yellen, i want to thank you for your excellent testimony. this hearing is adjourned. >> all right. there you go. janet yellen wrapping up her rescheduled testimony. you saw her in a rather long appearance. steve liesman has been listening in. we've got rick santelli and steve grass so on the floor of the new york stock exchange. the traders are here. we have a special guest i know all of you want to hear from today. we'll bring him in in a moment. steve liesman, to you first. any big surprises today? it sounded like more of the same of what we heard when yellen was on the hill before the house. >> well, i think green grasso, santelli and liesman, we will agree on one thing for sure. this was considerably shorter than the house testimony. that last one ran into like 4:00 in the afternoon and ended up being a cricket game. this one a lot more as normal as they do it.

i didn't hear her give too much in the way of additional guidance, scott, in the key areas that mattered about whether or not the fed was going to somehow reduce its tapering and response to the software data. the significant change in the outlet stood out to me in the first instance. she talked about bitcoin and something for the fed to regulate. kind of encouraged congress to look at whether or not it could be involved in the business of regulating it. finally, they're talking and looking a lot about the weather and whether or not that's been an issue in the data but not coming to any conclusions. one small sort of fed speak detail here. the fed needs to do something about the 6 1/2% unemployment rate. the threshold for when it would raise rates, and how to tell the markets to look for slack in the labor market. talked a lot about people working part time for economic reasons as one of the things she's looking at, scott. >> rick, up in chicago. how did yellen sound today? any surprises on your end? >> no. no, no surprises at all. and i would agree with most of

what steve said, but i would add an emotional factor. especially two areas. qualitative versus quantitative. i thought it was very interesting discussion between her and senator schumer. because, to me, and i've said this all along with regard to guidance when uk embarked on the same road. they've gone from a pencil point on quantitative easing to qualitative which is fuzzy. there are no answers which probably means longer and more -- i think there really is a chance that she may blink on quantitative easing. the other issue, this one really gets me rowed. i like to hear fwhat steve graso says. how many years has it been since labor first participation rate in the notion of star trek scottie beaming the unemployed off the reins of being accounted. how long have we all been discuss that? two years? 2 1/2. >> since clinton. >> we have been discuss that for

a while. steve, obviously there are many hours left in the trading day so we don't know ultimately what the reaction is going to be. reaction the last time janet yellen was on the hill was one in which the stock market went off to the races ended up about 200 points. did you hear anything in this testimony, in this appearance today that is going to guide trading for the rest of the day at the very minimum? >> i didn't. everything the other two gentlemen said is dead on. we expected to hear that 6 1/2% unemployment is a soft target. we expected her to blame the weather, we got that. we expected her to say that we're staying on course with taper. we got that. so the markets, nobody shorts the market. nobody sells the market. while someone of her caliber is speaking. you look at the s&p, we're stuck right here at 1850ish. that's the lel we cannot get above. yesterday, new home sales. where do we, we popped at 10:00. right to this level. the market is struggling here to make new highs. i heard nothing from the chair

that would let -- lead me to believe that we're going to rip off to the races higher. i would say it's a sell signal right here. >> that's interesting. liesman, we got last point to you before we take a quick break. oh, steve liesman's gone. here? here? >> i'm always here. >> what do you make of what receive said, i thought it was interesting that it was more of a sell the news than anything today although there are those out there who will take what's going on in the market today as yellen's got our back. if anything goes wrong, janet yellen is going to be there. >> i've been surprised and i love listening to the traders on this issue that the market issing looking through the economic data. i've seen the market go up really strongly on days when the data has been very weak. it looks like the market has made a decision that it's the weather, that we're coming back. i can tell you the xhiszs were in line with it in that it looks like we're going to go sub2% growth in this quarter but all the forecasts i'm seeing are an acceleration to 3%. that's the way the market is trading. and if that's true, then we have some, you know, give back from

the stronger second half of 13 as well as blr weather issues that's going to be off to the races come this spring if the spring ever comes. >> quick break. we're going do come back. we'll talk to the traders. again, we have a member of the baron's 100 with us today as well. three years in a row. going to gv you great market advice. also, is jcpenney back from the brink or not? the ceo making very upbeat comments on the call today and the stock, it's soaring. so are you buying it? then, a new online trading platform is offering services for free. robin hood has big plans to get you young people involved in the stock market but is it a good business model? we're going to talk to the founders and what it means. here's a shocker, tesla is up again. huge gains this year. now the company is planning to spend billions of a battery factory. smart homove? tesla is down 1% or so. you get the point. how do you know which ones to follow?

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welcome back. now we'll talk about the markets in the wake of janet yellen. the panel is steve weiss, you know that already, anthony is here as well, stefanie link here, too, josh and baron's top 100 adviser scott steagal of morgan stanley wealth management is here. talking about the markets here. josh brown, what was your big take away today from janet

yellen. >> the market has nod reaction. the take away is that people believe the taper will continue a pace. there's no reason to do the kremlinology thing where we try tointerpret every fed speech. >> scott steeg is here from morgan stanley wealth management, managing director there. you've been on the baron's 100 for three years in a row. what would your reaction be from what you heard today from a guy who plays a lot in fixed income. 50/50 fixed to equity but it's a big portion of what you do. >> from our standpoint it seems like things are as usual here. they're going to continue like they are. but i think over all our client base has a view that just got to be careful here. we've had this great run, especially after last year. so we're involved, we're taking advantage of it. but we're watching it, monitoring it. >> what's your view right now on the market and on bonds?

where do you think they're going? >> from a market standpoint i sort of, without calling a short-term call, i think we're going to kind of stay in this range, you know, we're going to see these kind of movements here. i think we'll have some periods of time where there's some adjustments down. i think as we get towards the end of the year we'll probably be up close to a 9%, 10% type of return in stocks. >> what do you think? this topping outbreaking out conversation, where are we more likely going to head? >> i think we're going higher. i think it's very clear. to think that we've topped out and we got a sell signal today, i don't see it. right now we've got a market near all-time highs. market just dpo don't go through those all-time highs and keep going. they have may jo jor resistance levels. great news that we're consolidating and not selling off. i look at italian yields. their ten-year keeps coming down. i look at spain. that's been coming down nap means our yields should be going up because their economies are better, their economies are stronger.

i'm bearish on bonds, treasuries, and bullish on equities. >> anthony? >> i think the first thing you've got to look at is mrs. yellen is a fantastic person in terms of giving presentation. so i think the market right now is sensing her and her competen competence. for me, i think she's an intellectual stud. i think i very much so believe that the markets are going higher. this is a 5% to 15% year for the market. it won't be as good as last year. but the earnings are there, the profitability is there. the big issue for the united states is going to be the wage disparity and how to deal with that. this market is going higher. i know steve grasso isn't here to box with me but i disagree with steve on this one. >> if you think that rates g r are going to continue to rise, and it seems to suggest that that's the way we're going. one way or the other, we're going to higher rates. what are the best investments in the environment then? >> i think when we talk about higher rates we have to talk about how much higher they go. two-year -- i mean, ten-year at a 260 kind of level.

our anticipation is you will probably see something closer to half a point or 50 basis point rise. so i don't think that the rise in interest rates is going to be all that dramatic. but we really like municipal bonds in here especially for high net worth individual who is in a high tax bracket. there's unbelievable opportunities today where you can go out right there and 4% to 5% tax free yields when you think about the taxable equivalent. it's very, very high. >> steph? >> so i think that we're actually on a trading range for the near term but i do agree that we are going higher for the longer term. i think we've got to get better economic data. we got some pretty good earnings for sure. and this week i thought that retail sales and earnings were certainly better than feared and expectations were so low that that's why your seeing this bounce. gross margins were very much under control. companieses are managing well in a difficult environment. that said, the economic data, the big picture hasn't been that good. i was encouraged by home sales

yesterday and certainly drove a goods today with business investment up at 1.6%. so that's encouraging. i think for us to take a leap higher we're going to have to get a little bit better macro data. we're planning on that but i don't think it's going to happen right away. >> quickly, steve and scott, you agree on the airlines. you like the airlines as a sector in equities and you've made a lot of money in the airlines. >> yeah, i think they keep going. there's still so many nonbelievers out there. i worry because of how far they've come? absolutely. do i think that they're going higher? yes. the risk element has increased undoubtedly. >> thanks. >> totally agree with him on that. they have pricing, the ability to continue pricing pressure. i think overall they will continue to grind higher. the capacity is very strong. i like airlines. >> thank you. thanks for being here. scott steagal with morgan stanley wealth management. next up, as cnbc turns 25 john harwood takes a look at what the world could be like in 25 years from now. and then from worst to first? that's what best buy is hoping

the results will maine mean. it's making a major move higher. big debate on the big box retailer is on deck. you will decide the winner and new online trading platform is ufring trades in exchange for social media, love not money. the cofounder of robin hood will join us to explain why they think this will work. more "half" is straight ahead. [ bagpipes play ] make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity.

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let's do our trader blitz. first up, noodles. shares are sliding after missing estimates on the top and bottom line. josh? >> this is a tough one. became public last year with explosive growth numbers. started to turn out that that's really new stores. because same-store sales not so hot. 3 percent. missed earns. not enough chart history here. i would avoid it. >> wendy's topping earnings estimates with revenues falling. missed the street. >> it's not a cheap stock. even if you believe in the

story, believe in the spin which is competitive. this one is expensive. i wouldn't own it. >> i wonder who is getting this next one. vale topping estimates did report a smallest annual profit since '97. steph, stock's up 3%. >> bottom line doesn't matter. it's all that especially bebitd. better cost cutting margins. this is the fifth beat on ebitda in a row. hopefully someone will take notice. >> i didn't know the company. >> uh-huh. >> someone take notice? >> i'm not taking notice. it's still -- starting short. >> stop, stop, stop. >> can i talking about noodles? >> baidu finished with a revenue growth thanks to the strength in mobile. >> this is a power house. 70% market share, 50% increase in revenues. for this stock 20 do better next year and look for it, in my opinion, to expand market share despite the competition.

>> all right. what will the u.s. look like in 25 years? one big fact to watch is the effect of aging baby boomers. john harwood joins us now with the state of the union in 2039 as cnbc continues to look ahead at the next 25 years. john, welcome. >> welcome, scott. thank you. look, if you think back 25 years the decision by cvs to stop selling tobacco products are huge. look ahead 25 years it's just the beginning. the role of health care in our economy will continue to grow along with us baby boomers with big implications for washington and corporate america. >> as consumers move from being just passengers in the health care system to really being the drivers and in the driver's seat, they're going to look for the places where they can get the most value, the most efficient efficiently, the most quality for their dollars. and that's a good thing. that's a good thing for the entire health care system. >> as more and more baby boomers

retire to social security and medicare, government policy will continue to drive private sector change. as government rewards the quality of health care not just the quantity, patients will be treated by teams that range from pharmacists to physicians to dietitians. as the ranks of the uninsured shrink, demand for care will change the supply with nurse trackticianers providing some services doctors do now. and as government and senior citizens alike look for alternatives to the cost and dreariness of nursing home care, helping retirees stay in their homes will become big business. >> we haven't quite figured that out yet but i think it's a great business opportunity for lots of businesses out there that do things to adapt people's homes, that figure out how to provide home-based, you know, chore services and those sorts of things. those are things that baby boomers, i predict, are going to want to buy and that will be a

huge -- it's already a huge. but it will be huge. >> what are the changes going to do to the u.s. budget because social security and medicare are going to get so big. encouraging trends in the recent moderation of health care costs. >> all right, john, we have trades around this. steve weiss, you first. i wonder why. >> i'm thinking further ahead because i'm a senior. so i'm going with hillebrand international and service corp. international which makes cas t caskets and take care of urns nor people who get cremated. botox, you know, you're a practitioner. that's one. and also cvs and express scripts. >> bonds? some people make the argument, they have in the past, that bonds are going to always have a bid because of the aging population. fair question? >> someone told me that steve is going to be using botox before he gets in the casket.

>> you get a discount. >> i would like to say pfizer because super viagra drug that will be announced. that isn't true. i like bdx. they've got a mode around their business. they will be very successful over the next ten years. >> josh brown? >> yeah, i'm super bowlish on "m" "murder she wrote", dvd sets. everything angela lansbury. people don't understand to the extent to which health care stocks have been out performing all markets. the xlv is up an annualized 24% over the last four years versus the world index of all stocks up only 9% annualized. this is massive out performance. you can just own it because it's goolt boy oh tech, farm suit suit calls. it want to comment on that bonds thing. you know, i think it's a mistake to think that a bond portfolio will be fine just because

someone's growing old. people are living a really long time. 25% of the people alive today are going to make it to 93. and in real terms versus inflation just because you own bonds doesn't mean you're protected. so i think you're starting to see retirement portfolios with heavier equity allocations in light of that reality. >> john? >> i know you've got to go. >> that's all right. >> i want to see what company springs up to deal with the i'm missions, the pollution that comes from the botox and cremation process. is that -- that is a good point. cross current. >> you could be a trader on the show. >> john harwood. up next, can best buy turn things around? the worst performer this year. coming up after the break. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪

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best buy may be the worst performing stock in the s&p this year but the stock is getting a nice bump on earnings today. the company announcing more aggressive cost cuts this year as best buy a good buy again? let's debate. anthony is the bull. josh is the bear.

anthony, make your case. >> i'm going to go back to the shippers where scott and i were foughting it out last year. take a look at where the shippers are last year. best buy is a terrible store but i disagree. there's a strong balance sheet. they're rationalizing costs. this is a company that's figuring how to sell to people who are in their store right eye way. they're going to not lose as much market share as street expects and they're going to see earnings momentum. this is a reason why i like best buy. all on the bad news that josh is about to give you is already in the stock. >> i disagree. this is a failed turn around and they happen all the time in retail. and history suggests you do not buy as the turn around is not coming together. there's 10% shortage in the stock which accounts for today's pop. this is the ultimate sell to rally name. i'm going to tell you something. this thing came back 250% in 2013 because management appropriately shrank and got their arms around cost and that's great.

the problem is it's not helping earnings growth. they're not going to grow this year. it's also not helping revenue, same-store sales down 1.2%. in the meantime, operating income has collapsed by 40% since 2011. net income is down four straight years. there is absolutely nothing technically to suggest that the stock price itself is bottomed. and so in the absence of a fundamental improvement hopes and wishes and nothing good to say about the chart, i just don't see why anyone would want to be long this stock right now. look at the market. 8,000 publically traded companies breaking out. this ain't one of them. >> it's 12 times earnings and it's 10% cash field. >> forever though. >> can anthony make this point? >> 10 % cash yield. i like josh a great deal. it's the same sort of argument with the shipper. shippers on the bull side, priced in the stock. best buy on the bear side, the information that josh is giving you is already priced in the stock. >> i'm worried about margins

domestically and internationally. i'm worried that inventories fell 11%. way more than the 3% in sales. leaning towards josh. >> to me it's too much like toys "r" us. they can't get it public because fundamentals keep deteriorating. >> tell white house your think won. tweet us and use #bull or #bear. we'll give you the results at theed of the show. coming up next, an online trading platform that allows you t to trade for free. you got that right. can it work? the founders of the robin hood app thinks so and they'll tell you why, coming up on the "half."

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coming up on "power lunch" at 1:00 p.m. eastern time, two big automakers making headlines, tesla and gm. one for the better, unfortunately one for the worse. we'll talk about that. a new low for the airlines some say. carriers are now burying bereavement fares for good. is that a bad pr move or smart business? crime and punishment, this jailhouse reporting of con man who conspired to murder a u.s. attorney who put him behind bars. all of that on "power lunch" at

1:00 p.m. eastern time. >> sue, thank you. we look forward to that. i want to bring you some news regarding a couple of activists investors today in developments in on going stories they've bee. first, dan lobe, first reported third point nominated three members to sotheby's board. third point, largest shareholder. three nominees including mr. lobe himself. harry wilson, considered a turnedaround expert. on yahoo!'s board with dan and another gentleman by the name of olivia reza. could tell you from a source, when my report was first broadcast quarter toing "squawk on the street," sotheby's in a board meeting learning dan intended to nominate three members of the board. loeb telling me when i spoke with him earlier other hedge funds in sotheby's will be supportive of third point, never lost a proxy fight, tradition

money manners fed up with the's governance of sotheby's. they want to work constructively with the board, like the new cfo. mr. loeb called for the ouster of the sitting ceo. that being william ruprect. the developments on that story. you saw the stock jump on our report earlier. the other big story today in the new development is in nelson peltz and his ongoing fight to split up pepsi. last wednesday you might recall he sent a white paper, some 31 pages to pepsi urging a split of that company. here are the white paper right here. pepsi responded saying it had no plans to split up the company. i spoke with peltz earlier today. he told he mees taken his case to the biggest shareholders. they're supportive. a positive reaction. taking the case to every major shareholder of pepsi in the

weeks again, mr. peltz feels strongly about the plan. nothing but rhetoric from pepsi, believe in the stand-alone beverage business and peltz telling me, important, he's willing to buy more stock to show his belief in the business and willing to go on the board if, in fact, he is asked, telling me that pepsi's power of one campaign does not work. the numbers do prove that. those are a couple of big developments involving a couple of big and well-known and maybe more active than ever activists investors. anthony, you first. >> i just want to let the viewers know for full transparency, i have about $1 billion of skybridge's money between dan and mr. peltz. dan will be successful here. become the kinder and gentler activist. he'll be very pervasive with that group of shareholders. as it relates to nelson peltz, a lot of the stuff he's saying is true. the activi simple activism you'

ceos around corporate america, beware and be more pro active with your decision-making and strategy. >> a quick thought, steve, before we move on? >> dan loeb one of the great investors of our time and i would not go against him. >> the fight between pepsi and peltz? >> a tougher time. more up on stock, tough fundamentals, but he'll keep a bit under the stock. >> he'll press the case. >> i don't think it happens. >> most of the cagney meeting defending the power of one strategy and talking about it. a big fight for a while. tesla planning for further growth with a $5 billion giga factory built in the southwest. fl phil lebeau has more on a stock that doesn't want to quit. >> up early today and pulled back. whether or not you look at the gig georgia factory, the potential for creating battery cells and packs for up to 500

shoush ,000 vehicles as a sign tesla is truly here for the long run. building in the southwestern united states, where, remains to be seen's we look at the shares now. the big question for investors. look and say, i can see the road for the next 10, 15 years and understand it better now that i realize theil build the battery packs going into the vehicles and potentially selling up to 1 million vehicles, if you believe estimates, by 2027. >> josh, a trade? phil, thanks very much. >> i think the trade is to watch this from afar. there's nothing negative about the story. it's phenomenal. if you can build a half a million cars by the year 2020, which is what the expectation, god bless him. he wants to do it in california. the problem is, it's not what you buy and what you invest in. it's what price you pay. i don't understand how you could be long on the stock here and expect as big gains as you've

had already. this is a 30-some-odd billion dollar enterprise value worth half about, of what gm is worth. not something aye want to get long here. >> and to a story you'll be interested in. forget paying $7 per trade. a new kid on the block in online brokerage business and they're not charging a penny. the robin hood app created in a stanford dorm room. founders are on a mission to get young people involved in the stock market with a social strategy and everyone's favorite word, free. vlad and another co-founders join us from san francisco. guy, great to you have on the show. vlad, if it's free, how do you as a business make money? >> great to be here, scott. so robin hood has several mon taization revenue streams on day one including margin lending, payment for order flow, interest on cash balances. those on day one, and in the near future, also we'll have

some other mon taization strategies that current brokerages aren't using including api access and premium features for active investors. important to note is that robin hood isn't focused on profits right now. we're focused on building an awesome user experience. that being said, we have these standard mon taization revenue streams and more to come in the future as we roll out. >> so i understand you guys have more than 1750,000 peop50,000 p waiting list. what does that mean? >> a great question. so we announced the product for the first time the end of december, and we really were excited to see the number of people that were interested in the product, and the idea with the waiting list is basically so we can control the rate at which we onboard new customer accounts. so i think onboarding is something like 150,000 customers in a short period of time is unprecedented in the brokerage

industry. pe wa we want to make sure every day we on board a new wave of customers all the systems we connect to can handle it. to that point, news today to announce. starting today, we're letting the first wave of customers actually to start using robin hood. >> the beta program starts. >> yeah. guy, interesting. thanks for being here. >> thanks for having us. >> what do you think? >> willing to trade the new york exchange if they were wearing t-shirts or hoodies, but sports jackets -- i'm not whenning to send them my money and it's like leading clams to slaughter in terms of no money to trade. so -- i wouldn't be advised. >> going in the casket with botox. >> back in a minute. rly. up late. thinking up game-changing ideas, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here... and pay no taxes for 10 years. with new jobs, new opportunities

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